The Reserve Bank of Australia (RBA) kept interest rates unchanged at its June meeting on Tuesday afternoon.
However, this is no cause for celebration among homeowners, as distressed borrowers now face having to hold out for months longer before interest rates are cut to a more manageable level.
The Reserve Bank of Australia has paused interest rates all year at 4.35 per cent amid signs of slowing inflation as the economy weakens.
The cash interest rate has not changed since November last year.
Many experts predicted that the cash rate could start cutting as early as this month in the June decision.
But in the past few months, many have revised their estimates downward, delaying the expected date for mortgage relief.
Last April, financial markets were betting that the Reserve Bank of Australia would cut the cash rate at the June meeting by 20 basis points, to 4.15 percent.
However, before today’s announcement, everyone was expecting interest rates to remain unchanged.
Australia’s four major banks expect interest rates to start cutting from November this year.
But last week, ahead of Tuesday’s meeting, ANZ changed its tune.
In her statement to the Australian public explaining the reasons for her decision on Tuesday afternoon, Reserve Bank of Australia Governor Michelle Bullock refused to provide any basis or hint at what comes next.
“Inflation has fallen significantly since its peak in 2022, as higher interest rates have brought aggregate demand and supply closer to equilibrium. But the pace of decline has slowed in the latest data,” she wrote.
“The economic outlook remains uncertain and recent data have shown that the process of inflation returning to target is unlikely to be smooth.”
She later added in her written speech: “There have been indications that the momentum of economic activity is weak, including slower GDP growth, higher unemployment and slower-than-expected wage growth.
“At the same time, revisions to consumption, savings rate and persistent inflation suggest that risks to the upside remain.”
ANZ Bank has revised its economic forecast to cut interest rates from February next year – a long way off for borrowers on the brink.
“The stronger-than-expected Q1 CPI also makes it difficult to see the RBA confident enough that inflation will return to and remain in range by the time… November meeting. .
“It’s not that monetary policy isn’t working,” he said.
“The economy has clearly slowed, particularly via private final demand. That’s why we think a rate hike is still unlikely.
“However, achieving the appropriate balance between the level of demand and supply is likely to take slightly longer than expected.”
It comes as two top economists poured water on the hopes of cash-strapped homeowners across the country.
They warned that Australians would be exposed to two more interest rate hikes before the end of the year.
Former Commonwealth Treasury chief adviser Warren Hogan believes borrowers will be forced to raise interest rates twice more over the next six months.
The first will be implemented in August, then again in November, at 25 basis points each.
“The evidence that has accumulated since their last meeting (the RBA board) gets worse and worse for that view,” Hogan told the Daily Telegraph.
Another economist shared his view, with University of New South Wales economist Richard Holden telling the newspaper the next meeting after today would likely raise the cash rate.